Thursday, October 6, 2011

Birth of a Nation?

Deliveries in China could have a major impact on imports into the United States in coming years. Actually, it’s the lack of deliveries, as in babies being born, a result of the “one-child” policy originally instituted by the Communist government back in 1979.

The steady drop in China’s birthrate is resulting in an upcoming squeeze in the labor market, reports Business Week. “The byproduct of that policy is an accelerating decline in the pool of young and largely unskilled labor that is the mainstay of mainland factories” said the magazine.

The number of Chinese 15-24 year-olds is set to fall by 62 million – over 27 percent – by 2025, say projections from the United Nations. The resulting upward pressure on wages could threaten China’s niche as the least-cost provider of low-margin goods, and force the country’s factories to refocus on higher value products, following the arc of “Asian tigers” such as Japan, South Korea, and Singapore.

Fewer Chinese mothers in labor means a smaller, higher-cost labor force for decades to come.
With many U.S. retailers and B2B suppliers dependent on low-cost Chinese manufacturing, the “contraction” of the workforce can have serious consequences for the sourcing and supply chains of manufacturers in America and around the world.

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